Having an insurance claim on your home is bad enough. Can you imagine this process with the added stress of the contractor you hired to remove water or repair damage getting your insurance check and not doing the repair properly or leaving after only completing part of the work? It makes a bad situation worse. Much worse.

How can this happen? It’s called Assignment of Benefits (AOB). Here’s what happens.

You have water in your living room and kitchen from a broken pipe. You don’t know who to call for help, so you look on the internet and find lots of names. You call the first one and they agree to come right out. When they arrive, they take a quick look and say they can get started right away and ask you to sign “here, here and here”.

Disaster has just struck twice!

When you signed “here” disaster just struck again because you signed an Assignment of Benefits. That means you gave all the rights in “your policy” to the contractor. Your rights include the insurance check for the claim itself. When you sign the AOB, the check for your claim will be made payable to the contractor and it will be sent to them! Why? Because you told your insurance company to do so, when you signed the AOB.

Another danger of the AOB is that often the amounts charged are inflated. The contractor may also charge for things that are not covered by your policy (or any policy). Your insurance company will pay for reasonable costs for covered repairs. When your insurance company pays the reasonable amount and your contractor says that their price is $5,000, the contractor will often file a lien on your home for the shortfall. In Florida, contractors’ liens can be enforced by foreclosure.

What can you do?

First, think like it’s your money you are spending. If a contractor came out and said “I need $5,000 to get started moving this water out of your home” would you give them $5,000 up front and let them go? Probably not. You might pay a smaller amount up front and more at the end, when the job is complete and you are satisfied with the work. When you sign the AOB, it’s like you paying them up front, in full. How concerned do you think they are about whether you think the job is done right?

Second, read what you sign. A reputable company may ask you to sign a work order to get going. A work order is okay, but make sure it is just a work order, not a work order and a contract. When you see words like assign, assignment or assignment of benefits, just stop. Do not sign without advice from your insurance agent or company. This may be hard to do when your feet are wet, but I’ll share more compelling information later.

Third (this could have been first), check with your insurance agent or insurance company. Most insurance companies have vendors that they have already checked out for reliability and they will have no AOB wording.

Having this knowledge before the contractor shows up may help keep you out of trouble. Take a look at this tragic story and see why I want you to know this. Homeowner Horror Story

On November 21, 2014, East Coast Insurors was named as the Official Insurance Agency for Operation Changing Lives Santa’s Sleigh.

“We are extremely excited to receive this designation for Santa’s Sleigh”, said East Coast Insurors President Steve Hall.

“Santa has an important job to do and if he were to bump into a star in the sky or have a hard landing on a rooftop, Santa would need to get his sleigh fixed immediately. Should one of these unfortunate events happen to Santa, East Coast Insurors is ready to help Santa get his Sleigh fixed and back in the sky so he can deliver his presents to the kids”, Hall continued.

Doctors John Akers and Curtis Schalit perform the surgeries and Cherise organizes events to raise funds. OCL has an amazing administrative cost of only 3.3% which means almost every dollar donated goes to changing lives.

“When Cherise told me OCL got Santa’s Sleigh, I thought, oh no, Cherise is at it again”, said Hall. After the shock, East Coast Insurors went into action to protect Santa’s Sleigh and OCL.

Bob overheard his daughter describing a watch she really wanted to a friend on the phone. She mentioned that she had dropped hints before her recent birthday to her Mom to no avail. Her birthday came and went and no watch.

Bob remembered a watch he had really wanted when he was in school that he too did not get. He was a little sad. He thought, “I’m going to figure out a way to earn some extra money to get that watch for my little girl”.

The next day he saw an article in The Daytona Beach News-Journal (article here) about the possibility of an alternative taxicab company called Uber coming to the Daytona Beach area. Uber was looking for drivers with a decent car who wanted to earn some extra money. Basically, Uber connects passengers seeking alternatives to traditional taxicabs with drivers who use their own vehicles to provide rides.

Bob contacted Uber online, filled out all the forms and pretty soon he was getting notifications on his phone that passengers were available for him to pick up.

Bob confirmed his availability to pick up the passenger. He drove to the passenger’s hotel, took the passenger to the airport and collected his fare.

“Wow”, Bob thought. “I can’t believe this. If this keeps up, I may quit my day job”. Bob picked up four more fares that day and looked forward to the weekend when he would have more time to drive. He only needed $200 more to get that watch for his little girl.

Saturday arrived and Bob was ready early. He had a 6AM pickup at a hotel for a guest who had to be at the airport for his 7AM flight. Bob met his passenger right on time. The passenger was getting nervous now. He was not sure he was going to make the flight. He told Bob “There’s an extra $20 for you, if you get me to the airport by 6:30”. “Yes Sir”, Bob said.

Bob put the pedal to the medal. He was making record time when he failed to see the lady in front of him slow to make a turn. Bob plowed right into her.

Bob staggered out of his car to check on the lady he hit. Her car was a disaster. When he looked in the front seat, he could see she was conscious, but she was moaning in pain. Bob dialed 9-1-1 right away. Help was on the way.

Bob shuffled back to his vehicle and found his passenger bleeding from the head where he had hit the door glass. He must have hit it hard because the glass was broken. He could see blood on the glass.

The police came. They called for an ambulance who took the lady in pain away. They had to call another one for Bob’s passenger. He was not going to make his flight. The police officer was nice enough, but Bob still got a ticket for failure to have vehicle under control.

As the tow truck driver hooked up his vehicle to haul it away, he called his wife to come get him. On the way home, he called his insurance company and reported the claim.

The next day the insurance company adjuster called and told Bob that he had not been able to get to speak with the lady he ran into because she was still in the hospital in ICU. It appeared she was hurt badly. The adjuster was able to speak to Bob’s passenger.

The passenger told the adjuster that he hired Bob to take him to the airport when the accident occurred. The adjuster asked Bob if that was correct. Bob said, “Yes, I just started doing that to make some extra money”. The adjuster said he would get back with Bob soon.

Two days later Bob got home from his day job and opened the mail. He opened a letter from his insurance company which read:

After a detailed review of your policy and your recent accident details, we regret to inform you that we will not be making any payment for the injuries to the lady you hit, the passenger in your vehicle. Nor will we make any payment for damages to your car or to the car of the lady you hit. We refer to the policy exclusion that reads, in part- “No coverage for your liability for the ownership or operation of a public or livery conveyance. This exclusion does not apply to share-the-expense car pool”.

Many people will do exactly what Bob did. He changed the use of his vehicle, but did not contact his insurance agent. This is a big deal and it happens all the time. People make all kinds of changes in their lives, not knowing what the insurance consequences are.

Most people think (wrongly) “I have paid my premium” and don’t concern themselves with what they have paid for.

“What, my policy doesn’t cover EVERYTHING”?

It does not.

Every personal auto policy has the above exclusion in it. Basically, this means if you charge a fee for riding in your vehicle, then no coverage applies.

The News-Journal article also mentions that Uber provides insurance. I went to Uber’s website and was dismayed to find a statement that you don’t need any “special insurance” to drive for them. They said “No. Your personal insurance policy is all you need”. Now you know from the above, that is not accurate. Maybe they won’t make you have coverage, but they shouldn’t say you don’t need “special coverage”.

Uber also says they provide coverage for you while you are using your vehicle transporting their fares. Really? Have you read their policy? What coverage do you have? Maybe you do have coverage, but when someone else controls your coverage, you are at their mercy (or their policy’s mercy).

In reality, to properly protect themselves, the drivers will have to buy a business auto policy rated for carrying passengers. This will be substantially more expensive, but you’ll be glad you have it should you ever have a claim.

There is nothing wrong with the service provided by Uber. It sounds like it may work very well. Just make sure you investigate what coverage you will need before you need it.

Jerry Seinfeld to rental car agent:“Yeah, You better give me the insurance because I am going to beat the hell out of this thing”From the Seinfeld Episode: The Alternate Side, Season 3, Episode 11

For many years, I used to recommend that our clients could safely rent a car with the knowledge that they had pretty much the same coverage as if they sat in their car with coverage from their own insurance policy.

About ten years ago, I had to change my tune. Now, I’m really singing it.

What happened?

The Rental Car Contract. (for those of you renting a U-Haul, please see update later in this post)

The rental car company (Rental) decided that there was another revenue stream for them in the form of Collision Damage Waiver (CDW) insurance. It has other names depending on the company, but it means if there is damage to their car, you’re going to pay for it, unless you have their CDW.

Here are some examples of the dangers you face.

You’re on vacation and you cause damage to their car. They decide that the damage is $4,000. They take $4,000 out of your credit card right now. Will that do anything to the rest of your trip? A $4,000 unplanned hit to your credit card limit will affect a lot of us.

What if you say, “The damage can’t be more than $2,000”. Their repair guys always cost more than your repair guys. And their guys rule. Why? The contract says so.

If the Rental charges $4,000 and your insurance company decides that $2,000 is really the fair cost of repair in the area you had the accident, you will have $2,000 shortage. Even worse, your company could deny the claim. Your insurance policy has a requirement that the company be able to inspect and appraise the damaged property “before its repair or disposal”. The Rental often will not wait for this to happen. Why? The contract says so and they have your credit card hostage.

Indirect losses are potentially big disasters waiting to happen. The Rental will claim loss of rental income if their car is out of service due to your damage. You have limited or no coverage depending on your policy. Another indirect loss is diminished value. This is where Rental says their car is worth less because of the accident. The diminished value is charged to you because Rental’s contract says they can. They may also charge administrative fees and neither these fees nor the diminished value are covered by most policies.

Rental’s contract will make you responsible for many things that are not covered by ANY insurance policy. Remember, when you sign the contract you agree to ALL these things. Like, fines, penalties, costs and others. Your policy covers liability for Bodily Injury and Property Damage, not everything. You will almost certainly see the word “indemnification”. This means you get to pay them back for anything they lose money on and you usually will get to pay their attorney’s fees also. Not a pretty sight.

Ever let your car be valet parked? Don’t do it again. Your Rental contract will be void if you let someone other than those on the rental contract operate the car. Usually, even the CDW insurance you paid for will be voided for this.

What about coverage from your credit card? Some cards do have some coverage, but all of them have restrictions. To get any coverage from your card, you have to decline the Rental’s CDW insurance. A very dangerous choice. I looked at my best credit card’s coverage and the limitations on it are very scary and there are lots of them. Do you have a full-size sport utility vehicle (whatever that means)? Don’t expect coverage. All I can say is that the credit card company’s coverage is free.

Rental car insurance issues have turned many a person’s dream vacation into a financial nightmare. Don’t let it happen to you. Buy the outrageously priced rental car company collision damage waiver insurance. When you’re done, just give the keys to the counter rep and smile all the way home. Like Jerry.

If you want to see The Car Reservation clip from this very funny Seinfeld episode, you can find it here.

Just like their automobile cousins, trucks present the same dangers as outlined above. I recently rented one to move my daughter. The cost of the 1 day CDW was $56. No one likes spending money on something you can’t eat or consume, but anything can happen when driving an unfamiliar vehicle. Remember, even if the damage is not your fault, IT’S YOUR FAULT! Why? Because the rental agreement you signed says so.

Another real danger here is that the truck you rent is too large to fit in your insurance policy. Three of the five companies I reviewed indicated that a covered auto included a pickup or van and a truck with a Gross Vehicle Weight (GVW) of 12,000 pounds or less. One company used 15,000 GVW as their limit and one indicated that a pickup or van was covered, but did not mention the word “truck”.

When you look at U-Haul’s website, you see a pickup, van and 5 truck options. A nice selection for those moving stuff. When looking at the GVW of each truck, one is under 12,000, three are 14,000 and one is 22,000. The 22,000 GVW exceeds the limit of all five policies.

These GVW restrictions are going to apply to the injuries you cause to others or damage to others property (not the rental truck). So it is highly recommended that you just forget about the GVW and buy the liability insurance from the truck renter.

Remember, even if your truck fits in one of the above slots for damages you do to others or their property, it does not protect you for the damage you do to the truck.

A final note for movers. Don’t forget your “stuff” that you are moving. If the truck catches on fire, is stolen or you roll it, your stuff won’t be pretty anymore. The good news is that you may have some coverage from your renters or homeowner’s policy on your residence. If covered, it is covered as if it is in your home. Everything is not covered. Some policies do not cover your stuff away from your home, so check with your agent.

Many of us born in the United States take our citizenship for granted. It’s just there. We’ve always had it, so we may overlook how lucky we are to live in the U.S.

I started thinking about this recently when one of our long-time associates, Cindy Galisin, mentioned that her husband Gabe was taking his Oath to the United States to become a U.S. citizen. Cindy has worked for us for almost 10 years and I knew Cindy was a Citizen because I remember when she took her Oath. I did not realize that Gabe had not yet taken his Oath.

I knew Gabe to be hard-working because he had done some work for me over the years (and Cindy told me how hard he worked).

I feel very fortunate to have known and worked with both Cindy and Gabe. They are part of what has made America great. Their contributions to our county have been positive and will continue to be so, I am quite sure.

Although Gabe is our newest citizen, East Coast Insurors is very lucky to have another naturalized citizen on our team. Sylvia Karpinski has worked with us for a year now and we look forward to many more years of her contributions.

When you watch the fireworks on the 4th this year, take a moment to remember how lucky we are to live in the greatest country on earth. Remember the men and women who have given their lives in service to and for the protection of our country.

Volusia County public high schools have announced the availability of free driver-education classes.

These classes fill up fast and are first come, first served.

Although most insurance companies offer discounts for young drivers who complete a required course (check with your insurance agent for details on which classes qualify), the most important reason to enroll your young driver is the information they are exposed to that will help make them more aware of the dangers they face as a new driver.